Diversification or Simplification? The Perpetual Challenge of Crypto Traders
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Cryptocurrency users are notoriously evangelical about the benefits and opportunities of these burgeoning markets, but any serious trader will admit that there’s a vast amount of complexity to manage. Furthermore, each new innovation and advancement only seems to add to the problem.
In the early days of crypto, traders only had access to a handful of centralized exchanges where they could on-ramp to Bitcoin from fiat and trade a limited number of altcoin trading pairs. Which pairs were on offer was a matter to be determined by the exchange. In some cases, a trader would have to open an account at a specific exchange because it might have been the only one offering a particular trading pair.
The explosion of innovation that came with the 2017 market boom brought more opportunities for traders. It ushered in the era of exchange giants as Binance went head-to-head with existing players like Kraken and Coinbase. Binance’s strategy of offering a vast array of token pairs designed to lure in many traders forced the competition to adapt their relatively meager listings to keep up.
Around the same time, exchanges also began to take notice of the success of BitMEX and its leveraged Bitcoin futures, along with the fact that regulated platforms like the CME had begun offering Bitcoin-backed futures contracts. OKEx and Huobi launched their derivatives markets, followed by Binance in 2019.
DeFi Offers Yet More Diversity
The crypto winter that followed the 2017 boom also proved fertile ground for cultivating the growing scene around decentralized finance. Platforms like Uniswap and Compound had been growing relatively quietly until the sun broke on 2020’s “DeFi Summer.” Suddenly, crypto traders had yet another new world of opportunity in the form of flash loans and arbitrage, liquidity mining, and yield farming.
Since then, the growth trajectory has continued, with DeFi branching out from its Ethereum-based roots to ecosystems including BSC, Polygon, Cosmos, Avalanche, and others.
However, when faced with thousands of opportunities, crypto traders now face a difficult series of choices.
Jack of All Trades?
To truly take advantage of all the opportunities for maximizing profits through trading, staking, providing liquidity, airdrops, token offerings, and more, they need to be everywhere at once. This means operating potentially dozens of different wallets and user accounts across the different blockchain ecosystems and exchanges.
Of course, the effort goes beyond simply opening an account or wallet – you need to monitor open positions across every asset or ensure you have robust algorithms or alerts in place to prevent excessive risk exposure if there’s a sudden price shock. It means having many tabs open and navigating multiple different user interfaces. And there’s the ever-present risk with crypto transactions that if you send funds to the wrong address, it’s game over.
Nevertheless, there are plenty of other advantages in taking this diversified approach, besides harvesting many earning opportunities. Hacks and scams are still all too prevalent in the crypto space, so many users feel more secure knowing their funds are distributed across different wallets and accounts. If one gets hacked, it’s not your entire portfolio at risk. As such, many crypto traders simply navigate the complexity of using multiple exchanges and wallets.
However, there is another option.
Streamline and Simplify
Portfolio trackers emerged as a way of allowing traders to look at their entire holdings in one view, although several have branched out from this straightforward proposition.
Some, such as Cointracker, are focused on portfolio tracking for tax reporting, while others like Zerion or Zapper have a decidedly DeFi-centric approach. Coinstats stands out for its integration with dozens of centralized exchanges and blockchain wallets, meaning you can sync and track your portfolio movements in real-time.
CoinStats was founded in 2017 as the founders were quick to see the complexity that was overwhelming crypto users and wanted to offer a solution. It achieved rapid organic growth, indicating that there was indeed an addressable market. Since then, Coinstats has grown to become an all-in-one toolset allowing 1.5 million monthly users to manage their crypto, DeFi, and NFTs in one single user interface.
New users can simply connect their wallets and exchange accounts and start tracking everything in real time. It also helps users research their next investments, offering advanced filtering and sorting features, along with links to the latest data and information about each digital asset.
CoinStats also offers an alerts feature, allowing users to get notified on particular triggers for a price, limit, volume, or market cap. The platform even now supports token swaps on decentralized exchanges, meaning you can even trade without leaving the screen.
Complexity in the crypto space often seems to come with the territory, and veteran users are well used to it. However, if there’s an opportunity to cut through some of the complexity, traders are free to introduce more diversification to their portfolio and trading activities without having to worry about all the extra effort involved. Ultimately, that spells good news, as it supports deeper liquidity and more diversity across the entire crypto space.
